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Wednesday, November 14, 2012

Risk/Reward

As expected, weakness has continued in the equity markets this week. However, based on the NDX/SPX topping comparative that I have been highlighting over the past few weeks, the downside exhaustion-proportional equivalent of the pattern is ~2525. Considering that the NDX finished today at 2531.87, the risk/rewards for continuing to press shorts here is weak. Based on this comparative, risk will shift to the upside in equities through the balance of November into December. I would estimate that the downside risks for the NDX could extend in the short-term to the zone of the June 5th/6th gap.

*This note and chart was edited at 4:30 EST to include todays close for the NDX.

S hips that pass in the night, and speak each other in passing, only a signal shown, and a distant voice in the darkness; So on the oc...

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Disclaimer

This is not investment advice. Erik Swarts is not a registered investment advisor. Under no circumstances should any content from this website be used or interpreted as a recommendation for any investment or trading approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This is strictly for educational purposes only.